JP Morgan's assessment seems very short term, bottom line focused -- typical Wall Street. On the other hand, Intel has been pursuing the smartphone business unsuccessfully for years. Remember its StrongARM and SoC with flash initiatives?

Markets are won and lost in transitions. There is a big one coming when smart phones move to 64-bits and JP Morgan would have Intel bail just before they hit that transition. There is no question that to date, Intel continues to shoot behind the duck on phones. But given that they are actually at lower power levels than ARM now and have brought a foundry capability on line going into this Richter-9 level market change, the suggestion to now snatch defeat from the jaws of victory is laughable.

Isn't this the same kind of quarterly-focussed financial wizardry (from the same wizards) that landed us smack in the middle of 2008?

@Rick, I agree. This is why we can't make good things. The bean counters want immediate returns. I remember when the US abandonned LCD manufacturing to the Japanese because they didn't project positive earnings for 10 years.

So here are some production facts, Intel economists and industrial scientists don't talk about, or don't want to talk about, today.

On 2013 financial Intel's fully burdened total cost of platform sale; microprocessor and its support components sold in the bundle deal, is $256 average total cost, $147 average fixed cost. Average total cost is determined PE&C < Dep + R&D, + Sales + Marketing + Intel Inside price fix cost / total processors produced. Average fixed cost is determined PE&C < Dep + R&D / total processors produced. Every product priced below these cost rungs, where AMD is forced too compete under conditions or production monopoly and distribution cartel, is subsidized by other Intel products priced in excess of average total and average fixed cost. Every time Intel sells product priced below these cost rungs, the result is a marginal revenue loss. This is a simplified way to look at cost within this general financial framework.

Pursuant to mobile economic assessment of cost price delivers a more precise result:

Bay trail full run taking into account 't' for android tablet, 'm' for mobile Chrome and MS 8.x, and 'd' for Celeron Value line that is also 'i' for embedded upping package for better thermals. Noteworthy,there is nothing value about the Pentium branded Bay trail 'm' incorporating $18,313,509 in consumer monopoly overcharge values, in this case a tying dealer value, associated with 2,850,467 of the Pentium branded Bay trail 'm' when sold at one unit price greater than $160.

Average Weighed Price = $32.46 (which happens to be the average of 1K price)

Average Marginal Revenue = $22.76

Average Marginal Cost = $ 9.70

Intel Hard Dice Fabrication Cost = $4.85

And consider the 'm' and 'd' short runs combined

Average Weighed Price = $134.58

Average Marginal Revenue = $94.36

Average Marginal Cost = $ 40.22

Intel Hard Dice Fabrication Cost = $20.11

So is Mr. Krzanich's stated Bay trail 't' subsidy the actual dice fabrication cost of the other two Bay trail grades 'm' and 'd'; $20.11?

Also notice the marginal revenue loss between the combined 'm' + 'd' runs verse tablet alone; $94.36 - $22.76 = $71.60. That is Intel's actual revenue loss over the full run for every unit of bay trail allocated to tablet. Opportunity cost of selling 10,000,000 bay trails into Android or MS 8.x tablet over Chrome book and Value mobile delivers a $716,000,000 marginal revenue loss. Allocating into embedded 'i' adds to that marginal revenue loss considering 'i' 1K price range $31 to $52.

If you haven't noticed lately a lot of those Bay trail 't' grades have just been supplied into the industrial embedded market as Bay trail 'i' grades that is a Tunnel Creek replacement.

Bay trail 'i' is aimed to knock ARM derivatives out of the embedded compute modules product categories, where Freescale I.MX6, is just hanging on given price for the applications feature set. I.MX7 and 8 have been annoucned.

There is another way to look at this, please see Mr. Groff's analysis in Seeking Alpha, Intel Tablet Contra Revenue Will Cost About 3.5 Cents Per Share in Q2, April 17, 2014.

See http://seekingalpha.com/article/2146613-intel-tablet-contra-revenue-will-cost-about-3_5-cents-per-share-in-q2

Intel strategy is to price Bay trail 't' progressively down tablet short run marginal cost curve to run end hard cost, to reach their 40,000,000 unit supply objective. And appears too be doing so already, addressing the very low end of China, Android Tablet market.

But there's more. And that is called the 22 nm to 14 nm transition. Lacking a shrink, or bumping into production obstacles, q3 2014, aiming for 60,000,000 units, Intel marginal cost can go through the roof. And that will really add to the Bay trail tablet platform subsidy.

Intel might make some profit in tablet market as they are a brand seen closeness to PCs but mobile its so very difficult. It will be another player in the smartphone market. There is enormous amount of competition. ALmost every company that has presence in semiconductor wants to try out smartphone.

In conjunction with unveiling of EE Times’ Silicon 60 list, journalist & Silicon 60 researcher Peter Clarke hosts a conversation on startups in the electronics industry. One of Silicon Valley's great contributions to the world has been the demonstration of how the application of entrepreneurship and venture capital to electronics and semiconductor hardware can create wealth with developments in semiconductors, displays, design automation, MEMS and across the breadth of hardware developments. But in recent years concerns have been raised that traditional venture capital has turned its back on hardware-related startups in favor of software and Internet applications and services. Panelists from incubators join Peter Clarke in debate.